Swiss Re unit acquiring UK pension business of HSBC Life | London Mercury

Swiss Re unit acquiring UK pension business of HSBC Life

London Mercury Wednesday 11th June, 2014

• Swiss Re Admin Re- agrees to acquire individual and group pension and related annuity policies from HSBC Life (UK) Limited

• The deal will see Admin Re acquire over 400,000 individual and group pension and related annuity policies as well as 4.2 billion pounds in unit-linked assets from HSBC Life

• The transaction is scheduled to close in the second half of 2015

LONDON - HSBC Life (UK) Limited, an indirect wholly-owned subsidiary of HSBC Holdings plc, the parent company of the HSBC Group, has entered into an agreement to sell its UK pensions business to ReAssure Limited, a wholly-owned subsidiary of Admin Re Group, part of the Swiss Re Group.

Under the terms of the agreement, HSBC will sell its corporate and individual pensions policies, and an associated annuities book, by way of an insurance business transfer scheme under Part VII of the Financial Services and Markets Act 2000 (as amended), the bank said in a statement.

On 31 December, 2013, the value of the underlying assets under management forming part of the transaction was approximately 4.2 billion pounds (approximately US$7.05billion), of which approximately 4 billion pounds were managed by HSBC Global Asset Management (UK) Limited.

Under a new contractual arrangement, HSBC Global Asset Management will continue to be the investment manager of these underlying assets. maintain and increase the scale of its business and provide attractive shareholder returns

The deal will see Admin Re acquire over 400,000 individual and group pension and related annuity policies as well as 4.2 billion pounds in unit-linked assets from HSBC Life (UK) Ltd, the Zurich, Switzerland based company stated Wednesday.

The transaction, between HSBC Life (UK) Ltd. and the world's second-biggest reinsurer Swiss Re's Admin Re unit, is scheduled to be completed in the second half of 2015.

Admin Re is one of the three business pillars of Zurich-based Swiss Re. It buys and manages blocks of closed life and health insurance funds, mainly in the U.S. and the U.K., which no longer sell new contracts. The unit has been looking for joint-venture partners after merger talks with Phoenix Group Holdings failed in November.

As part of the transaction, HSBC has also entered into a reinsurance agreement with ReAssure transferring certain economic risks and rewards of the business to ReAssure from 1 January 2014 until completion of the deal.

"The transaction is an attractive opportunity for Admin Re and confirms our commitment to execute on the strategy to grow the Admin Re business in the U.K.," John Dacey, chairman of Admin Re, said in a statement.

"Transactions such as this allow Admin Re to maintain and increase the scale of its business and provide attractive shareholder returns."

The lender will continue to offer pension products underwritten by other providers, the bank said.

Since 2011, Europe's biggest bank has sold or closed more than 60 businesses as HSBC Chief Executive Officer Stuart Gulliver seeks to controls costs and increase profitability.

The deal comes after U.K. Chancellor of the Exchequer George Osborne scrapped rules in his March budget that pushed retirees to buy an annuity with their pension savings.